Exchange Traded Funds

A_Flock_Of_Sheep

Does anyone here hold any ETFs? What ones do you hold and for what purpose?

For example FTSE 100 All Share ETF?
MacQuarie Global Infrastructure ETF?

Am I right in thinking that these are collective funds such as IPHI but the main difference is the value is "live" on the stock exchange not updated at the end of the day?

Also if you hold them what "platform" do you use. It appears HL charge £11.95 to deal, there is no stamp charge but they also charge £2 per month to hold them in an ISA.

ETFs seem to have attracted a lot of criticism too.

MoneySaverLog

I see ETF's as a way to hold a stock market index or commodity inside a ISA and benefit from any rise in the index/commodity.

Totton

A_Flock_Of_Sheep wrote: »

....

Also if you hold them what "platform" do you use. It appears HL charge £11.95 to deal, there is no stamp charge but they also charge £2 per month to hold them in an ISA....

Are you sure HL charge £2 a month for each ETF? I have bought several ETF's through HL and only ever paid the normal dealing price, no £2 a month. The only time they have charged me £2 month has been for an index tracker such as Vanguard LifeStrategy. HL do charge 0.5% up to max £45 in an ISA and zero if held in a fund & share account, I think it is still £200 for their SIPP if you hold equities, ETF's, IT's etc.

For ETF's I have only used iShares and typically I have held the more popular ones as they were easier for me to understand http://www.hl.co.uk/shares/exchange-traded-funds-etfs/popular-etfs

Some say that you should not use ETF's that don't hold the physical holding but other stuff that I have read reckons the counter-party risk is nothing to worry about.

HTH,
Mickey

atush

Some say that you should not use ETF's that don't hold the physical holding but other stuff that I have read reckons the counter-party risk is nothing to worry about.

There are different classes of ETFs broadly physical (they hold the shares or commodity) or synthetic (which don't but track the price).

I prefer physical.

Perelandra

MoneySaverLog wrote: »

I see ETF's as a way to hold a stock market index or commodity inside a ISA and benefit from any rise in the index/commodity.

You can hold an index tracker in an ISA using a standard fund- it doesn't need to be an ETF. They do provide a good way of holding commodities in the ISA as you say, or in holding an index in a (share) trading account, and generally speaking have low management costs (although arguably this advantage will be eroded by RDR).

dunstonh

and generally speaking have low management costs (although arguably this advantage will be eroded by RDR).

RDR isnt the main impact. Platform review is. With OEICs going clean for retail, they will no longer cross subsidise clean priced investments.

I prefer physical.

From an advisory point of view, I wont go near synthetic. Risks are too high.

Perelandra

dunstonh wrote: »

RDR isnt the main impact. Platform review is. With OEICs going clean for retail, they will no longer cross subsidise clean priced investments.

Perhaps, but all I was really using this as a short-hand way of saying "eroded by the changes brought in through the reform of the industry".

dunstonh

Platform review was originally timed to match RDR. Splitting the dates made things messy.

jamesd

A_Flock_Of_Sheep wrote: »

It appears HL charge £11.95 to deal, there is no stamp charge but they also charge £2 per month to hold them in an ISA.

HL do not charge £2 a month platform fee for ETFs in their ISA. They charge 0.5% of the holding value a year, billed monthly based on the value for that month. There is a cap on the total value of these 0.5% charges of £45 a year across all such investments, so those with more than £9,000 in them will pay less than 0.5%. The £1 or £2 platform charges for some funds aren't included in that cap.

grey_gym_sock

the way to look at it is not so much "do i want to buy an ETF?" but that, if you want to buy a tracker, your choice is basically between an ETF or a conventional fund (i.e. an OEIC or a unit trust).

the differences can include:

* availability - there are generally more ETFs tracking niche areas; more mainstream areas tend to be available both as ETFs and as funds

* cost - both of the ETF or fund, and what your platform charges on top (e.g. see the discussion above of HL's different charges for ETFs or funds)

* physical vs synthetic ETFs - i think funds are always physical, so this is only a choice for ETFs ... (i'm another person who'd avoid synthetic ETFs: they have additional risks; i have no idea whether these risks are something i should be worried about; so i'm following the principle of not buying what i don't understand)

badger09

grey_gym_sock wrote: »

so i'm following the principle of not buying what i don't understand)

I don't really understand electricity, tv, telephone & internet, computers..... need I go on? But I still buy them :eek:

Like many newbie investors, I'm really trying to understand but there is just so much to take in that I fear I might pop off this mortal coil before I achieve any real depth of understanding